Restaurants to be banned from keeping staff tips

Businesses can choose to keep service charge paid by card under existing legislation

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Restaurants will no longer be allowed to keep waiters’ tips when customers pay by card under new legislation, according to reports.

Business secretary Kwasi Kwarteng is expected to announce plans to stop businesses from keeping the service charge, which, under current legislation, they are allowed to do when patrons pay by card.

Restaurants can choose whether to keep or pass on the service charge paid on card to their staff, but are banned from retaining cash tips.

Plans to force restaurant bosses to hand over all tips to staff were first announced in the Queen’s Speech in 2019.

At the time, Her Majesty said: “My government will take steps to make work fairer, introducing measures that will support those working hard.”

The government said the bill would “promote fairness for workers by creating legal obligations on employers to pass on all tips to workers in full and, where they distribute tips amongst workers, to do so on a fair and transparent basis.”

Around 1.7 million hospitality workers stand to benefit from the new bill, which would see them receiving 100 per cent of the service charge.

A source for Whitehall told the Mail on Sunday: “Workers going above and beyond for their customers can now rest assured that their hard-earned tips will be going directly in their pockets and nobody else’s.

“We’re putting an end to dodgy tipping practices and making sure that hard work pays off.”

It comes as the hospitality industry struggles with chronic staff shortages, exacerbated by the combined impact of Brexit and the coronavirus pandemic.

According to the Office for National Statistics, job vacancies grew by 35.2 per cent between June to August to 269,000, with the largest increase seen in accommodation and food service, which rose by 57,600 (75.4 per cent).

A government spokesperson said: “We are doing everything we can to back hospitality staff as the sector recovers.

“Workers should get the tips they deserve, and customers should have reassurance that their money is rewarding staff for their hard work and good service. Further announcements on this key issue will be made shortly.”